Capital’s Audit Gap Shrinks by 15pc

Addis Abeba had 767.8 million Br worth of audit gaps and financial irregularities last year

The audit gap is considered an improvement compared to the recorded financial irregularities of two years ago, which had an aggregate gap of 905 million Br.

The Addis Abeba City Administration’s Auditor General’s Office uncovered 767.8 million Br of audit gaps and financial irregularities in the last fiscal year

Sixty of the city’s agencies had their financial conditions audited out of 70 that were initially targeted. The Auditor General, Tsegewoyen Kassa, evaluated 65pc of that fiscal year’s budget for the city, which stood at 35.4 billion Br.

The audit gap is considered an improvement compared to the recorded financial irregularities of two years ago, which had an aggregate gap of 905 million Br.

Uncollected accounts, unaccounted expenses and unjustified salaries and benefits were among the factors that the Auditor General presented in the report during the annual assembly of the City Council, last week.

It was found that there are over 137 million Br unsettled payments by nine city agencies. This included the Addis Ababa City Road Authority (AACRA), which has 130.5 million Br that has not been paid on schedule.

“It is not an audit gap,” said Shiferaw Bekele, Institutional Changes & Support Stream deputy director general at the Authority. “We pay contractors in instalments as progress payments.”

Another 123.3 million Br has also been recorded as a financial irregularity who to the payments were made was unknown.

The highest figure for the financial irregularities is from uncollected accounts from 11 institutions that stands at 329.6 million Br.

“It is a result of not paying enough attention to the unsettled accounts and lack of follow-up,” says Tsigewoyn.

The city’s Road Authority takes the highest share of this as well, at 228 million Br. The Addis Abeba Water & Sanitation Development & Rehabilitation Project Office has over 92 million Br in uncollected funds.

“The Authority had not conducted an internal audit since 2004. In the last fiscal year we found out that the budget gap stood at 1.1 billion Br,” said Shiferaw. “We have addressed the problem, and only 228 million remains unaccounted which we are trying to address as well.”

Procurements made without following procurement laws amounted to 112.3 million Br, with the Water & Sanitation Project Office accounting for four-fifths of the gap.

The Auditor General’s Office had less success in conducting property audit in 15 institutions.

“There is significant progress when it comes to financial auditing of the city’s agencies, but the same cannot be said about property audits,” Tsigewoyn, says.

The Auditor General’s Office has 123 employees and a yearly budget of over 17 million Br. Only four years ago, the Office was able to audit just six per cent of the city’s finances.

“Financial and property audits are not a problem just in the city but in the whole country. Since internal auditing is viewed as a fault finding mission, the process is undermined,” says Eyob Tesfaye (PhD), a macroeconomist. “We are overdue for stricter budget discipline and auditing.”

The federal government has been stressing the same issue for the past fiscal year as domestic revenues, and financial conditions of agencies have persistently disappointed. The Federal Auditor General’s Office presented a report late last May that showed over 20 billion Br in audit gaps in the 2016/17 fiscal year.

Addis Abeba’s City Administration approved the capital’s budget for the new fiscal year, which stands at 44 billion Br, last Tuesday.